Calculate EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) from your income statement figures.
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EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization. Adding these non-operating and non-cash items back to net income gives a picture of a company's core operating profitability, independent of financing structure, tax jurisdiction, and capital investment decisions.
For example, 50,000 in net income plus 5,000 interest, 10,000 taxes, 8,000 depreciation, and 2,000 amortization gives an EBITDA of 75,000.
EBITDA is commonly used to compare profitability across companies with different debt levels, tax situations, or asset bases, and is a common input into valuation multiples (like the earnings-multiple method used for small business valuation).
No. EBITDA excludes some real cash costs, like changes in working capital and capital expenditures, so it's a proxy for operating profitability, not a direct measure of cash generated.
Revenue is optional and only used to calculate EBITDA margin (EBITDA as a percentage of revenue). Leave it blank if you only need the EBITDA figure itself.
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